Carlsberg Profit Beats Estimates as Russian Beer Share Gains

Carlsberg A/S (CARLA) reported first-quarter
profit that beat estimates as the brewer increased its leading
share of the Russian beer market and sales surged in Asia.

Earnings before interest and taxes, excluding some one-time
items, rose to 661 million Danish kroner ($116 million) from 574
kroner a year earlier, the Copenhagen-based maker of Tuborg said
in a statement today. Analysts had expected 624 million kroner,
according to the average of 13 estimates compiled by Bloomberg.

Carlsberg gained as much as 5.5 percent in Copenhagen
trading, the steepest intraday advance since June 6, 2012. In
Russia, where the government has raised beer taxes and increased
regulation on alcohol sales, Carlsberg extended its market
leadership with investment to support both international premium
beers and local brands. The brewer reiterated its full-year
forecasts after Heineken NV (HEIA) last month cut its outlook and
Anheuser-Busch InBev NV (ABI) posted earnings that missed estimates.

“I find some comfort in them winning market share in the
Russian market,” said Stig Nymann, an analyst at Alm. Brand
Markets, in a telephone interview. “They have had some strong
initiatives with product launches, sponsorships and so on in the
quarter. We knew that the market was weak from the competitors,
but it seems they have been doing OK in Russia.”

Carlsberg was up 1 percent at 553 kroner as of 1:30 p.m.
The stock rebounded after falling 7.2 percent in April.

‘Very Satisfied’

The brewer’s share of the Russian beer market rose to 38.4
percent in the quarter from 37.6 percent a year earlier,
Carlsberg said, citing data from researcher Nielsen. The market
shrank at a mid-single digit pace, it said.

Several lines of Baltika beer were extended in the country,
while Carlsberg started sponsorship of the 2014 Sochi Winter
Olympic games and the Russian National Hockey League.

“They sent a strong signal to the market that they have
regained control over the Russian business and are now able to
harvest some of the advantages there are of being the market
leader in such a large country,” said Morten Imsgard, an
analyst at Sydbank A/S.

Carlsberg said beer volume in Asia rose 14 percent in the
quarter, excluding acquisitions. Including takeovers, volume was
up 18 percent, with particularly strong growth in Vietnam,
Cambodia and India, helped by increased ownership in the
Chongqing Jianiang Brewery joint venture.

‘Getting Better’

The growth in Asia helped offset the effects of declining
beer markets in western Europe.

“Asia will be the fastest growing region, as we have
always assumed, but I also expect eastern Europe at some point
in time to get back to some growth again,” Chief Executive
Officer Joergen Buhl Rasmussen said in a telephone interview.

“We are getting better and better at execution, and
execution in the broad sense in terms of how we deliver what we
want to deliver in all the outlets,” Rasmussen said.

The brewer expects 2013 operating profit before one-time
items of about 10 billion kroner while net income, adjusted for
some items, will probably rise by a mid-single-digit percentage.

Carlsberg repeated that it expects beer markets in all its
three regions to be similar to last year in 2013. In 2012, the
western European beer market declined by about 3 percent, while
the Russian market was unchanged and Asia expanded.